Automobile sales slump following deregulation<\/p>\n
JAKARTA (JP): Last month's deregulatory measures, which cut
\nback tariffs on imported vehicles, has caused a decline in
\nautomobile sales of up to 30 percent.<\/p>\n
Chairman of the Indonesian Automotive Industry Association
\nHerman Z. Latif told reporters after a hearing with the House of
\nRepresentatives here yesterday that the situation is temporary,
\nwith sales likely to increase again in coming months.<\/p>\n
\"As we predicted, tariff reductions are almost immediately
\nfollowed by a decline in demand as consumers become doubtful and
\neven confused of new situations,\" he said.<\/p>\n
Herman said that consumers might expect prices to continue to
\nfall.<\/p>\n
He is sure that in the long run, demand will recover and
\nautomobile prices will be market driven once again.<\/p>\n
Under the May deregulatory measures, the import tariff on
\nsedans and station wagons, the types of which are assembled
\ndomestically, has been lowered from 175 percent to 125 percent
\nand will be further reduced to 40 percent by 2003.<\/p>\n
The tariff on pickups has been reduced from 60 percent to 50
\npercent and will be further cut to 30 percent by 2003 and the
\ntariff on minibuses from 100 percent to 75 percent and 30 percent
\nin 2003. The tariff on heavy-duty trucks is set to remain at 5
\npercent.<\/p>\n
Herman refused to make a detailed prediction yesterday as to
\nhow long the sales decline would prevail, saying it could be
\nbetween three and six months, depending on market developments.<\/p>\n
He said that the market slump will not halt automobile sales
\naltogether -- particularly the sales of sedans and station wagons
\nwhich are most effected by the deregulation.<\/p>\n
He said sales of vehicles have fallen by about 10 percent to
\n30 percent, depending on their types and makes.<\/p>\n
Sales<\/p>\n
Data from the association indicate that total automobile sales
\nfell from 274,603 units in 1990 to 263,073 in 1991 and to 171,898
\nin 1992, before rising back to 214,298 in 1993 and surging to
\n326,471 in 1994. During the first four months of this year,
\n88,777 vehicles were sold, comprising 74,941 commercial vehicles,
\n1,680 jeeps and 12,156 sedans.<\/p>\n
Shortly after the deregulation, a number of car assemblers
\nannounced that they had cut sedan prices by up to six percent.<\/p>\n
Herman also said that automobile prices might increase in the
\nfuture if the Japanese yen continues appreciating against the
\nU.S. dollar.<\/p>\n
Herman said in the hearing with House Commission VI, which
\noversees industrial affairs, that last month's deregulation,
\nwhich will gradually cut backs tariffs on vehicles, might
\ndiscourage prospective investors from getting involved in the
\nautomotive industry.<\/p>\n
\"The government, therefore, should offer incentives to
\nencourage investors to help develop the country's automotive
\nindustry,\" he said.<\/p>\n
Herman said the incentives could include tax exemption for the
\nmanufacture of certain strategic components.<\/p>\n
He said Indonesia lacks small- and medium-scale component
\nplants to supply producers of automotive vehicles.<\/p>\n
He cited that South Korea's Hyundai company had over 1,250
\nsuppliers for its car manufacturing plant and Volkswagen of
\nGermany had some 16,000 suppliers.<\/p>\n
\"Indonesia has only about 135 component suppliers,\" he said.<\/p>\n
The association currently groups 22 sole agents of 27
\nautomobile brands, 14 assembling companies, seven component
\nmanufacturers and one distributor. (pwn)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/automobile-sales-slump-following-deregulation-1447893297",
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